Technology

Why the tech giants may suffer lasting pain from their US lashing

WASHINGTON — Wednesdays much-anticipated antitrust hearing in the U.S. House of Representatives subjected four of the tech industrys most powerful CEOs to hours of aggressive questioning by Republicans and Democrats alike.

But it also may have revealed something far more lasting: A Congress that has largely soured on Silicon Valley is beginning to figure out how to hold it to account, compiling piles of documents that could back up allegations that the industrys biggest companies arent playing by the countrys competition rules.

That could be the most lasting implication for Facebooks Mark Zuckerberg, Amazons Jeff Bezos, Googles Sundar Pichai and Apples Tim Cook, whose companies are being increasingly challenged by lawmakers in Washington and beyond.

Here are five top takeaways of what we learned Wednesday.

1) Democrats came ready, and with plenty of evidence

The House antitrust subcommittee has spent a year on this investigation — collecting emails and confidential presentations, locating chat records, and reassuring small competitors that its safe to tell them of their stories of the Big Four. And some of the subcommittees top Democrats came prepared with that evidence, in a coordinated effort to poke holes in Zuckerbergs, Bezos, Pichais and Cooks contentions that they compete fully in the letter and spirit of U.S. antitrust law.

Take Rep. Pramila Jayapals (D-Wash.) back-and-forth with Zuckerberg over whether hed threatened Instagram co-founder Kevin Systrom before eventually buying the company for a billion dollars in 2012. Jayapal pulled up a chat between Systrom and an investor in which the Instagram co-founder floated the possibility that Zuckerberg “will go into destroy mode if I say no.”

When Zuckerberg disputed the congresswomans characterization of those events, Jayapal swung back with a classic bit of congressional theater: “Id like to remind you that youre under oath.” Underscoring the point, the subcommittee published a cache of its investigative materials, including the full Systrom chat log, midway through the hearing — a way of extending the five-hour-plus hearings shelf-life even longer.

In the same vein, committee members hit Bezos with emails illuminating Amazons motivation for buying the smart doorbell company Ring; wrote Bezos in that correspondence, “To be clear, my view here is we are buying market position — not technology.”

2) Republicans are more interested in tech bias than antitrust

The hearing got off to a bang when Rep. Jim Jordan (R-Ohio) brought out his outdoor voice to recite a litany of alleged examples of anti-conservative bias, including on the part of Twitter, whose CEO Jordan had made a show of attempting to invite to the hearing.

Perhaps anticipating Jordan would have a go at hijacking the hearing, was primed to shut him down: He quickly swatted away Jordans attempt to enlist a fellow Republican not on the subcommittee to question the CEOs on their threats to “freedom.”

That put to rest any notion that the tech executives were facing a unified bipartisan front ready to drill down on antitrust abuses.

Jordan later tried again, attempting to go to the ropes with Google CEO Pichai over whether his company would play fair during the 2016 election. Pichai seemed somewhat befuddled by Jordans line of questioning, eventually promising that, yes, Google would play things neutral. Pichai was let off the hook when the right to question passed to Rep. Mary Gay Scanlon (D-Pa.), who opened with a shot at “fringe conspiracy theories.”

Jordan objected, loudly, but the hearing moved on.

Republicans did get traction here and there. Rep. Kelly Armstrong (R-N.D.), for example, got into a robust exchange with Pichai on the ins-and-outs of how the companys ad tools interact with the YouTube platform it owns. When Pichai said the companys approach was more sensitive to users data-security concerns than other models, Kelly shot back that Google was using privacy as “a cudgel to beat down the competition.”

But even Rep. Ken Buck (R-Colo.), who has recently carved out a lane as a thoughtful conservative critic of Silicon Valley, touched on how Amazon engages with competitors before veering off onto a round of getting each of the CEOs to commit to not sell products produced using “slave labor.”

And while the hearing produced few of the full-out tech gaffes that Congress has become known for, top subcommittee Republican Jim Sensenbrenner notched one when he asked Zuckerberg about why presidential son Donald Trump Jr.s social media account was recently taken down for a short time over a controversial hydroxychloroquine video. But that controversy involved Trumps Twitter account, not Facebook. (Zuckerberg sidestepped the platform misidentification, using it as a moment to point out that Facebook is pointedly pro-“free expression.”)

3) Facebooks still vulnerable

Zuckerberg was the target of perhaps the days toughest questioning, not simply from Jayapal but other from Democrats who homed in on Facebooks billion-dollar acquisition of Instagram in 2012. Their premise: that Zuckerberg saw the photo-sharing platform not as a neat startup that would round out Facebooks own image-sharing tools but a potential existential threat — one whose absorption, then, potentially violated U.S. competition law.

New York Democrat Jerry Nadler, the chairman of the full Judiciary Committee, laid into Zuckerberg on the topic, again using internal communications in making his case. Nadler pointed out that according to documents in the subcommittees hands, Zuckerberg was prompted to dig out his checkbook because he worried that “Instagram could “meaningfully hurt us without becoming a huge business,” and that by buying the still-small company, “what were really buying is time.”

Buying up a competitor simply so it will stop competing is potentially a no-no under U.S. antitrust law, Nadler pointed out, to which Zuckerberg responded that the Federal Trade Commission knew his thinking about Instagram way back in 2012, and those antitrust enforcers still signed off on the deal. But Cicilline was unpersuaded, telling Zuckerberg that “the failures of the FTC in 2012 of course do not alleviate the antitrust challenges that the chairman described.”

The shorter version: Just because that one corner of the federal apparatus approved the deal some eight years ago doesnt mean Zuckerberg is out of the woods. And deals that are made can be unmade.

Facebook has bought scores of companies, of course, but Instagram is different. The visual-first platform, hugely popular in its own right, is key to Zuckerbergs vision for the future of Facebook — especially as its a way of attracting a Facebook-phobic younger audience that otherwise is flocking to the Chinese-owned upstart TikTok. Washington peeling Instagram away from Zuckerbergs empire might be unlikely, but its also a future that the CEO isnt eager to contemplate. And the House antitrust subcommittee made plain that its a possibility it wants Zuckerberg to worry about.

4) Jeff Bezos took lots of heat, and didnt always seem ready

This was, somewhat amazingly, Amazon CEO Jeff Bezos first ever time testifying before Congress, despite the enormous wealth and power he enjoys. (When Bezos was sworn in today, he was ranked No. 1 on Forbes list of the worlds richest people, with $180 billion under his control. As a point of comparison, the wealthiest member of House of Representatives, Rep. Greg Gianforte (R-Mont.), was worth about one-thousandth that.)

And for a time, it looked like it would be a easy day for Bezos. Seemingly because of technical difficulties with his Cisco Webex feed, Read More – Source

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